Small and marginal farmers in distress

It is official now. New data released by the National Sample Survey Organisation (NSSO) for 2013 show that the agrarian distress in rural India is continuing, and even intensifying for small and marginal farmers. In the last decade, there has been much talk on inclusive growth, revival of growth rates in agriculture, higher public investment in agriculture and the doubling of agricultural credit. Yet, the new data show that all these policies have largely bypassed the rural areas, and particularly the small and marginal farmers.

In 2013, agricultural households constituted 57.8 per cent of India's rural households. Cultivation and livestock rearing were the principal income sources for 67 per cent of agricultural households. The average monthly income of an agricultural household in 2012-13 was estimated at Rs 6,426. The states with highest levels of income were Punjab, Haryana, Jammu and Kashmir and Kerala.

The average monthly consumption expenditure per agricultural household was Rs 6,223. If we assume an average family size of 4.9, the per capita monthly consumption expenditure was Rs 1,270. Our rough estimates show that given the decile distribution of consumption expenditures, the proportion of agricultural households below the new Rangarajan poverty line would be between 30 and 40 per cent.

Let us consider the poorest 50 per cent of the agricultural households. Their average household incomes were actually less than their average consumption expenditures.

What is the record of the procurement schemes? For all crops (except sugarcane), less than 5 per cent of households reported sale to a government agency/cooperative that assured minimum support prices (MSP). Farmers largely sold their output to private traders. Only 31 per cent of paddy farmers and 39 per cent of wheat farmers were even aware of the MSP scheme. Worse, only 13.5 percent of paddy farmers and 16.2 per cent of wheat farmers sold their harvest to procurement agencies. The reason: shortage/unavailability of procurement agencies and local purchasers. Actual prices received by scores of farmers were lower than the MSP.

Agricultural extension and crop insurance were also poorly developed. Only less than 5 per cent of agricultural households insured their crops. The most important sources of technical advice were “progressive farmers” and “radio/TV/newspapers”. Only 1 per cent of agricultural households had access to NGOs for technical advice. For “farmer households”, the earlier SAS survey of 2003 had also shown similar results.

SAS shows that the economics of crop cultivation in India remained precarious for a large section of farmers. The key results of the 2013 round of the All India Debt And Investment Survey (AIDIS) provides information on the conditions of asset ownership, indebtedness and investment for two sets of households: all “rural households”, and “cultivator households”. All rural households operating at least 0.002 ha of land were treated as “cultivator households”. The share of rural households indebted rose from 23.4 percent in 1992 to 31.4 percent in 2013; the share of cultivator households indebted rose from 25.9 percent in 1992 to 45.9 percent in 2013.

From where did they borrow? Between 1992 and 2013, the share of debt outstanding from informal credit sources increased sharply.

The results from the AIDIS reveal three realities of rural India in the era of financial liberalisation. First, through the 1990s and 2000s, financial liberalisation has continued to undo the improvements in agricultural credit achieved after bank nationalisation in 1969. Secondly, though the UPA government in 2004 announced a scheme to double the supply of agricultural credit, the increase in credit flow from banks has not reached the farmers. Thirdly, ad hoc measures like the debt waiver scheme or relief packages have improved neither the conditions of farmers on the ground nor the overall credit supply to rural areas.

Neo-liberalism has trapped the peasantry between rising costs of cultivation and inadequate output prices. Increased openness to world markets has intensified price volatility and raised price risks. Alongside, neo-liberal policies have also weakened price support systems so as to open farmgate purchases to multinational corporations and retail giants. The new data reaffirm the Left's demand that a comprehensive reversal of neo-liberal policies has to be, necessarily, the starting point of efforts to address India's agrarian distress.

By: R Ramakumar and Aparajita Bakshi